Widely considered the founder of the modern strategy field, Michael Porter discusses his current work on the Social Progress Imperative and its accompanying Social Progress Index. He explains why social progress must be on the radar of every business executive. He also describes why Denmark (among countries) and America's largest bank, J.P. Morgan Chase (among corporations) lead the world in terms of their commitment to social progress. In the end, he makes it clear that the most powerful way for any company to affect society is through its business model.
D. Sunil Reddy established Dodla Dairy in 1995 in Nellore district of the southern Indian state of Andhra Pradesh. An industrial engineer from Mangalore University, Sunil set up Dodla as a greenfield company at the age of 27 with seed money provided by his father. He was inspired by his grandparents and father to help those in need grow and flourish and by Mahatma Gandhi's call to "reach out to rural India". The company had grown well over the years. In fiscal 2015-16, it achieved an annual turnover of over INR 11 billion and aimed to touch INR 25 billion in revenues by 2020. It had a workforce of more than 2,000 employees, procured about a million liters of milk per day from 250,000 milk producers, and processed and sold milk and milk products at 67 locations in nine states in India. In 2011, Private equity fund Proterra invested INR 1.1 billion in Dodla, bringing down the family's shareholding from 100% to 76.34% (it would later go down to 72.3%). Sunil knew that if the company had to move to the next orbit, both in terms of size (revenues, assets and market share) and professionalization, certain organizational changes would be necessary. He wondered what these changes would be and who would make them. How could he better prepare himself and the company for the future? How would the company move from being a family-owned enterprise to a professionally run, sustainable organization? Would one of his daughters join the organization, bringing freshness to the company while providing continuity in terms of family values? Would the company be run by an outsider? "Who after me?", thought Sunil. He often wondered whether the brand "Dodla" and the company he had founded would sustain beyond himself. While he continued his efforts to increase capacity, expand and capture more market share, he kept asking himself, "What next" and "How do I build a legacy?
Lake's experience as a consultant to retailers and restaurants led to a fascination with how untouched those industries were by 21st-century technology. As a lover of both clothes and data, she felt certain that data could create a better experience with apparel--as long as the human element was preserved. From the beginning Lake planned to build a data science operation to make Stitch Fix scalable. The company's revenue is dependent on great recommendations from its algorithm, so its data scientists have a direct line to the CEO. Data science is deeply ingrained in the company culture: In addition to client recommendations of clothing, algorithms keep capital costs low, inventory moving, and deliveries efficient. Product development has adapted algorithms from genetics to find successful "traits" in clothing. Stitch Fix has even used machine learning to design apparel. But, Lake says, shopping is inherently a personal and human activity, which is why human stylists can alter or override the product assortment a styling algorithm delivers before the client receives a shipment.
Asking questions is a uniquely powerful tool for unlocking value in organizations: It spurs learning and the exchange of ideas, it fuels innovation and performance improvement, it builds rapport and trust among team members. And it can mitigate business risk by uncovering unforeseen pitfalls and hazards. But few executives think of questioning as a skill that can be honed-or consider how their own answers to questions could make conversations more productive. That's a missed opportunity. The good news is that by asking questions, we naturally improve our emotional intelligence, which in turn makes us better questioners-a virtuous cycle. The authors draw on insights from behavioral science research to explore how the way we frame questions and choose to answer our counterparts can influence the outcome of conversations. They offer guidance for choosing the best type, tone, sequence, and framing of questions and for deciding what and how much information to share to reap the most benefit from our interactions, not just for ourselves but for our organizations.
Most leaders view employee freedoms and operational controls as antagonists in a tug-of-war. They tend to focus on regulating workers' behavior, often putting a damper on commitment, innovation, and performance without realizing it. But freedom and control aren't zero-sum, argues the author. By giving people a clear sense of their organization's purpose, priorities, and principles--that is, by providing freedom within a galvanizing framework--leaders can equip employees to make on-the-ground decisions that are in the company's best interests. Gulati uses businesses as diverse as Netflix, Alaska Airlines, and Warby Parker to show how freedom can function in different settings. A coherent framework helps employees develop a deeper understanding of the business, which can lead to improved engagement, creativity, efficiency, and customer service.
Over the next decade, as artificially intelligent assistants like Alexa and Siri become the main channel through which people get information, goods, and services, the way companies acquire, serve, and retain customers will radically change. Because the bots will have deep knowledge about individuals' habits and preferences, they'll be able to anticipate a consumer's needs even better than the consumer herself can. They'll ensure that routine purchases flow uninterrupted to homes and constantly scan and analyze complex offerings like insurance and data plans for the best deals. And the more AI assistants satisfy consumers, the more trust in them will replace trust in brands. Marketing will soon become a battle for AI assistants' attention, says Dawar. Brands will focus on influencing AI algorithms and will compete for placement on the assistants' platforms. In return, brands will be able to get data on consumers from the platforms. That's something companies will need in this new world, because AI assistants' never-ending reassessment of purchases will force them to keep producing new tailored offers and innovations to keep their customers on board.
When implemented correctly, agile innovation teams almost always result in higher team productivity and morale, faster time to market, better quality, and lower risk than traditional approaches can achieve. What if a company were to launch dozens, hundreds, or even thousands of agile teams? Could whole segments of the business learn to operate in this manner? As enticing as such a prospect is, turning it into a reality can be challenging. Companies often struggle to know which functions should be reorganized into multidisciplinary agile teams and which should not. And it's not unusual to launch dozens of new agile teams only to see them bottlenecked by slow-moving bureaucracies. The authors, who have studied the scaling of agile at hundreds of companies, share what they've learned about how to do it effectively. Leaders should use agile methodologies themselves and create a taxonomy of opportunities to set priorities and break the journey into small steps. Workstreams should be modularized and then seamlessly integrated. Functions not reorganized into agile teams should learn to operate with agile values. And the annual budgeting process should be complemented with a VC-like approach to funding.
Every leader knows the importance of the first hundred days or the first year in office--the period during which one must assess and diagnose, formulate a vision and a strategy, and achieve early wins. And guidance abounds for how CEOs in their final months on the job should approach their main responsibility: helping develop and select a successor and then smoothly handing over power. But little attention has been paid to the time between those stages. How can CEOs make the most of the middle years of their tenure? The authors conducted detailed interviews with high-performing former CEOs, asking, among other things, how their priorities, mindsets, and approaches evolved in their second act. Five themes emerged as essential to success. Leaders should keep raising the company's level of ambition, attack silos and broken processes, rejuvenate talent, build mechanisms for dissent and disruptive ideas, and spend their accumulated leadership capital on bold long-term moves. Beyond these specifics, the authors say, CEOs often benefit from viewing their tenure as a series of chapters rather than an undivided span.
Companies invest heavily in grooming star talent for leadership--but most of them haven't figured out how to manage the growing population of employees who care deeply about their partners' or spouses' careers at the same time that they want to advance their own. As a result, many high potentials are heading for the nearest exit. The author has seen this happen again and again in her research on dual-career couples in tech, health care, professional services, and other industries. She says the crux of the problem is that companies tend to have fixed paths to leadership roles, with set tours of duty and rigid ideas about what ambition looks like. That creates flexibility and mobility challenges for employees--and recruitment and retention headaches for employers. Organizations must adopt new strategies for managing and developing talent. They can remove barriers to advancement by allowing people to develop skills and networks in more-creative ways--through brief "job swaps," for example, or commuter-leader roles. But often a culture change is needed. Instead of stigmatizing flexibility, companies must learn to embrace it.
Why have women failed to achieve parity with men in the workplace? Contrary to popular belief, it's not because women prioritize their families over their careers, negotiate poorly, lack confidence, or are too risk-averse. Meta-analyses of published studies show that those ideas are myths--men and women actually have similar inclinations, attitudes, and skills. What does differ is the way they are treated on the job: Women have less access to vital information, get less feedback from supervisors, and face other obstacles to advancement. To ensure gender equity, the authors recommend that managers: (1) Question the stereotypes behind their practices; (2) Consider other factors that might explain the achievement gap; (3) Change workplace conditions accordingly; (4) Keep challenging assumptions and sharing learning so as to create a culture in which all employees can reach their full potential.
Today layoffs have become companies' default response to the challenges created by advances in technology and global competition. Yet research shows that job cuts rarely help senior leaders achieve their goals. Too often, they're done for short-term gain, but the cost savings are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation, which hurt profits in the long run. This article looks at better ways to handle changing workforce needs that make sparing use of staff reductions and ensure that if they do happen, the process feels fair and the affected parties have a soft landing. Most successful approaches begin with a philosophy that spells out a firm's commitments and priorities, establish methods for exploring layoff alternatives (such as furloughs, retraining, and reassignments), and determine options for three scenarios: a healthy present, short-term volatility, and an uncertain future. As firms like AT&T, Michelin, Honeywell, and Nokia have learned, thoughtful planning helps organizations address workforce transitions and cope with a shifting economic landscape far better than layoffs do.
Political risk was once relatively easy to define--more often than not, it involved dictators seizing foreign assets. Today it comes from a wide array of actors: citizens making videos on cell phones, city officials issuing ordinances, terrorists with truck bombs, cybercriminals, and more. Supply chains are longer--and more vulnerable--and the geopolitical landscape is more crowded and uncertain. But just because you don't know exactly where political risk will come from, that doesn't mean you can't prepare for it, say Rice, the former U.S. secretary of state, and Zegart, the codirector for the Center for International Security and Cooperation at Stanford. Effective risk management is still fairly straightforward. Companies that excel at it are strong in four core competencies: understanding, analyzing, and mitigating risk, and responding to crises. In this article, Rice and Zegart outline what each competency entails, providing questions that every organization can ask to identify gaps, along with case studies that illustrate how companies have successfully addressed real-world political threats.
We're often reluctant to ask for help because of the social threats involved--uncertainty, risk of rejection, potential for diminished status, relinquishment of authority. But without support from others, it's virtually impossible to advance in your career. And studies show that most people are surprisingly willing to lend a hand--if you ask in the right way. The author provides three reinforcements that can be incorporated in requests: (1) "In-group." Assure the potential helper that you are on the same team and that the team is important. (2) "Positive identity." Create or enhance people's recognition that they are uniquely placed to provide assistance and that they routinely come to others' aid. (3) "Effectiveness." Be clear about what you need and about what impact the help will have.
In 2013, two entrepreneurs launched the Virtual Market in Mexico City with a mission to transform small traditional retailers (the so-called "mom-and-pop" shops) into competitive market players. The family-owned shops were strongly embedded in the society, culture, and economy of Mexico and Latin America, producing 50 per cent of the region's retail sales and 15 per cent of Mexico's true gross domestic product. However, economic growth had increased consumers' earnings, leading to previously low-income consumers gaining financial status. The traditional shops were unable to compete with the new demands for cashless payment methods, wider ranges of products and services, and lower prices. To remedy the situation, the Virtual Market gained the trust of the shop owners and worked to improve their financial, technological, and business literacy. By 2017, the Virtual Market had successfully worked with 10,000 shops but had still not attained break-even. Was its business model sustainable in the long term? Could it be replicated in other countries and with other cultures? How could it scale up and secure profits?
In August 2016, the global procurement manager at Hu-Friedy Mfg. Co., LLC, a large U.S. dental equipment manufacturer, realized that materials were being transported between suppliers and production facilities without a consistent strategy-potentially costing the company thousands of dollars each year. To evaluate the company's transportation needs, the manager considered a range of alternatives, including buying or leasing a truck or hiring a third-party logistics (3PL) provider to manage the transportation. To complete his analysis, the manager needed to develop a new set of routes for pickups and deliveries, evaluate the costs associated with owning or leasing a truck, determine the costs of a 3PL provider, and ultimately determine the course of action that would have the most impact on transportation costs with the least impact on daily operations.
The chief executive officer of Daimler Trucks and Buses China Ltd. was on an expatriate assignment in China. In November 2016, he faced a discomforting situation that could bring an abrupt halt to his career; an unfortunate incident in which he lost his temper led to fierce outrage in local Chinese and worldwide media. The media reaction threatened China's prominence as a major source of revenue for Daimler, and sent Daimler's share price on a downhill spiral. How should Daimler react, and what could it do to restore the company brand image?